Media companies weigh creating streaming device to bypass Roku, Amazon talks

Photo: Chris Murphy / Flickr Creative Commons

Some media executives have discussed creating their own streaming television hardware devices in order to bypass conversations with Roku and Amazon, according to a report.

Those discussions come after some companies, including AT&T’s WarnerMedia and Comcast’s NBC Universal, have experienced problems getting their streaming applications on Roku and Amazon Fire platforms over the past few months.

That consideration was highlighted in a new article published by The Information on Wednesday that explored how recent business tactics by Roku and Amazon could weaken their grip on the streaming television hardware market. Analysts say the companies hold a collective 70 percent stake in the streaming hardware space, with Roku taking a slight lead over Amazon.

Roku’s rise to power came in large part thanks to its mission of being content-agnostic, opening up its streaming platform to any developer willing to make an app for its set-top box and streaming stick devices. Amazon’s market share is largely thanks to the retailer’s willingness to produce basic hardware at cheap prices and bundle it with other perks, including Amazon’s Prime membership and compatibility with  the company’s line of smart speakers.

Amazon has always been aggressive when it comes to negotiating services for its Fire TV platform: It famously booted YouTube off Fire TV devices during a dispute with Google, which competes with Amazon in the cheap streaming hardware space. The dispute lasted for around a year before both sides reached an agreement.

Roku has started to franchise moves from Amazon’s playbook as the company shifted its focus in recent years away from hardware and toward offering third-party subscriptions through its own app, the Roku Channel. The company also started requiring free, ad-supported apps to agree to terms that allowed Roku to insert a small amount of its own commercial advertisements and collect viewing data on app users.

Roku and Amazon believe the popularity of their devices gives each greater leverage over app and content distributors. But in recent months, companies have started pushing back: Earlier this year, AT&T pulled its DirecTV Now (later AT&T TV Now) app from Roku devices, and broadcaster Fox did the same just before the Super Bowl. Each time, the companies said they were unable to agree to terms over the apps. Those disputes were eventually settled.

Similar disputes have kept two much-anticipated apps — AT&T WarnerMedia’s HBO Max and Comcast’s Peacockoff Roku and Amazon Fire TV devices, forcing millions of streamers to use competing devices from Apple or Google to watch programming on each service or simply avoid those services altogether.

Now some media companies are starting to look beyond Roku and Amazon. On Wednesday, The Information’s Jessica Toonkel said some executives were discussing the possibility of creating their own streaming TV hardware. The media executives were not named in the report. Toonkel said discussions also included potential partnerships with smart TV manufacturers who had their own app ecosystem.

If a streaming device were to surface, it would not be without precedent: Comcast currently offers its own streaming television hardware device called Flex that franchises the cable company’s popular X1 platform. One Flex device is given to Comcast’s Internet-only customers for free, and Flex was an early launch partner for Comcast’s Peacock streaming service with the app landing on Flex boxes a full three months before its national rollout.

Likewise, AT&T has also experimented with building its own Internet-based hardware to support its streaming services. Earlier this year, AT&T unveiled AT&T TV, a streaming cable alternative that comes bundled with an AT&T-branded Android TV box.